South African Airways (SAA) will launch its new low-cost carrier, Tulca, next month to gain a share of the fast-growing budget-travel market, MPs heard on Wednesday.
”Passengers want no-frills and low-cost, and … we have to respond to what passengers want,” SAA CEO Khaya Ngqula told the public enterprises portfolio committee.
Over the past three years, low-cost carriers had captured half the airline passenger market.
Ngqula said Tulca, a wholly SAA-owned subsidiary, was ready to go, and ”most of the approval” for the new low-cost carrier had been obtained from the authorities.
It would take to the skies ”by the middle of next month”.
Domestically, SAA would then focus its attention on business passengers, ”people who want a better service than a low-cost carrier can offer”.
The airline was also talking to potential partners in Africa, including Ghana and Nigeria.
Internationally, SAA was looking to realise more benefits from its new membership of the international airline network, Star Alliance.
”It’s a new world for us. From the 43 destinations we covered as an airline, now our passengers can go to more than 900 destinations,” Ngqula said.
Earlier in the briefing, SAA chief financial officer Gareth Griffiths said SAA’s profits had dropped by 90% over the past financial year, from R648-million in 2004/05, to R65-million in 2005/06.
The airline’s high fuel bill — fuel costs had shot up by 51,5% over this period — had pushed up operating costs.
Other costs had increased by 5,5 %, and while this figure appeared low, it had to be realised competitors around the world were showing negative growth costs.
Speaking to the South African Press Association later on Wednesday, SAA corporate communications head Jacqui O’Sullivan said Tulca would be officially launched on October 30.
Asked what share of the low-cost carrier market Tulca aimed to grab, she declined to put a figure on the subsidiary’s business objectives, saying only that start-up costs were ”relatively small” and mainly involved the leasing of aircraft and a small project team.
Tulca would have a completely separate identity from SAA, including its own board, executive committee and marketing company. However, it would share maintenance facilities with SAA. — Sapa